[Quote No.23949] Need Area: Money > Invest "...some companies are able to grow profitably and return high rewards to shareholders over decades...What makes this entrenchment possible?...[namely] barriers to entry... -If there are significant economies of scale in an industry, it may be costly and, therefore risky for a competitor to reach an existing producer’s cost structure. –An established brand and customer loyalties take time and money to build up. –Businesses that require substantial initial capital investment, such as large-scale car manufacturing, will deter those which would have to raise capital and pay a risk premium. –There may be costs in switching products. These may be actual (retailers stocking a new ice-cream brand may need new freezers) or psychological (it is difficult to persuade people to try a new ice cream if they are happy with an existing product). –Existing distributors may be tied up by the existing product that new distribution channels have to be created. –Expertise, patents, or exclusive supply agreements are difficult to break/replicate. –Government may regulate or license entry (as it does in many broadcast media)." - Richard SimmonsHe holds an MA from Oxford and an MBA from City University. Quote from his book 'Buffett Step-By-Step'Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23953] Need Area: Money > Invest "...a body of work labelled behavioural finance has built on psychological research to dispute the idea that investors act as dispassionate calculating machines...One powerful set of biases tend to give more significance to the most recent news, good or bad, than is actually warranted. The stocks of companies that report high rates of growth are driven to extremes, as are stocks of companies that disappoint. These findings about excessive reactions confirm a belief that value investors have held since Graham: Over the long run, performance of both companies and share prices generally reverts to a mean. The first edition of [Graham and Dodd’s] ‘Security Analysis’ had as a frontispiece this quote from Horace’s ‘Ars Poetica’: ‘Many shall be restored that now are fallen and many shall fall that now are in honor’." - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23954] Need Area: Money > Invest "There is general agreement that the value of a company is the sum of the cash flow it will produce for investors over the life of the company, discounted back to the present [using a subjectively chosen discount rate that adequately reflects both interest rates and the riskiness of the company relative to other investment alternatives – perhaps the risk-free 10 year government bond rate plus a 2-3% risk premium]. In many cases, however, this approach depends on estimating cash flows far into the future, well beyond the horizon of even the most prophetic analyst." - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23955] Need Area: Money > Invest "A value investor estimates the fundamental value of a security and compares that value to the current price Mr. Market is offering for it. If price is lower than value by a sufficient margin of safety, the value investor buys the security...There are times when Mr. Market is so euphoric that he puts a high price on everything he owns. Value investors have to be able to just say no and wait until Mr. Market comes to his senses – or better, until he turns so sour and negative that he will part with anything at a bargain price. [with a sufficient margin of safety that the risk of permanent loss of capital is very low]" - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23958] Need Area: Money > Invest "The old corporate adage of data processing managers, that nobody was ever fired for buying computers from IBM, applies as well to money managers. Nobody loses a job for average performance or for holding the same securities as the rest of the group...[so] toward the end of a reporting period [i.e. the year-end list of stocks held]...managers window-dress their portfolios, dumping the stocks that have fallen in price and loading up on the past year’s (or quarter’s) successes...driving up the price of currently successful stocks and depressing even further stocks that are already downtrodden. [providing good opportunities to sell over-priced and buy under-priced stocks.]" - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23959] Need Area: Money > Invest "...people assume that companies that have performed well over the prior year or two are good bets for the future and expect that companies that have disappointed will continue to perform poorly. We predict by [short-term] extrapolation. A more thorough examination of the correlation of past performance with future return would reveal just the opposite: over a two or three year period, yesterday’s laggards become tomorrow’s leaders and vice versa...reversion to mean is not a concept we embrace naturally." - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23961] Need Area: Money > Invest "...as a group they [value investors] probably do run more concentrated portfolios [10-15 companies] than their non-value orientated peers [20-30 companies]. There are several reasons...[1] the only securities they select are those they feel they understand, and their preferences are for those companies that can be reliably valued, with stable positions, a history of steady earnings, and businesses that are not vulnerable to sudden changes in technology or consumer taste. If these requirements exclude value investors from owning the alluring growth names in technology or other industries undergoing transformation that is a restriction they have been willing to accept...[2] the margin of safety requirement provides a mechanism for reducing risk that is totally distinct from diversification..[3] by continually challenging their own judgements...[and looking] for some credible confirmation of their opinions...knowledgeable insiders are buying...highly respected investors are taking similar positions...[4] limit[ing] the amount of the portfolio they will commit to a single security...[and] If a position appreciates above those limits, it is a signal to trim back by selling into strength." - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23962] Need Area: Money > Invest "The kind of merchandise that Buffett wants is simply ...‘good businesses’. To him that essentially means operations with strong franchises [i.e. those with barriers to entry for potential competitors and pricing power which he calls 'an economic moat'], above average returns on equity, a relatively small need for capital investment, and the capacity therefore to throw off cash...But finding such businesses isn’t easy; Buffett likens the hunt to bagging ‘rare and fast-moving elephants’." - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23963] Need Area: Money > Invest "...value investors consider the three sources of intrinsic value to be the reproduction cost of the company’s assets, the current earnings power of any franchise [from the current competitive advantage], and the value of its earnings growth within that franchise [in excess of the cost of the investments needed to pay for the assets that support that growth and the sustainability of that growth.] An investor can have most confidence in his or her estimate of the reproduction cost of the assets; they exist in the present and can be measured with some precision. The value to put on current earnings power in excess of asset value is somewhat less certain. The earnings themselves, and the rate at which they should be discounted, are firm enough, but the value of those earnings depends on the company’s continued success next year and for many years after that. Even the most established companies can lose their way, see their profit margins shrivel under pressure from new competitors, or find their services and products no longer in demand. So value investors are willing to buy companies based on their earnings power value only if there is an adequate margin of safety to cushion potential disappointments. The most difficult aspect to value is the worth of future earnings growth, even though there are times when the market will pay for nothing else. The uncertainty has two sources. First, we need to assume that the company will grow at a specific rate in the future, for a number of years. Perhaps it will, perhaps it won’t, but we cannot say with full confidence. Second, we also have to assume that the growth will be profitable – that is, growth within the franchise...[and] growth in earnings in excess of the cost of the investments needed to pay for the assets that support that growth." - Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van BiemaQuote from ‘Value Investing From Graham to Buffett and Beyond’Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.23966] Need Area: Money > Invest "Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. The calculation of intrinsic value, though, is not simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised. Two people looking at the same set of facts, moreover – and this would apply even to Charlie [Munger] and me – will almost inevitably come up with at least slightly different intrinsic value figures." - Warren BuffettAuthor's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image